Workers' Compensation Reinsurance Association

“The workers' compensation reinsurance association (wcra) was created by the minnesota state legislature in 1979. Minnesota (mn) law requires all insurers and self-insurers to purchase workers' compensation reinsurance by becoming members of the wcra. State law specifies the composition of the board, which includes: four insurer representatives elected by insurer members of the wcra and approved by the mn commissioner of labor and industry; two self-insurer representatives elected by self-insurer members of the wcra and approved by the mn commissioner of labor and industry; two employer representatives, two employee representatives, and one public representative appointed by the mn commissioner of labor and industry; the mn commissioner of finance (or designee); and the executive director of the mn state board of investment (or designee). Due to the structure of the wcra and the board, self-insurer and insurer board members have a business relationship with the wcra because their employers are all insured by the wcra.”

“By statute, certain decisions made by the wcra board of directors are subject to approval by the minnesota commissioner of labor and industry as indicated in item 6 above, such as approval of membership assessments or surplus distributions, reinsurance rates charged by the wcra, the wcra board annual stipend, and per diems paid to the board and committee members.”

“THE WCRA'S OUTSIDE TAX ADVISOR, PWC US TAX LLP, PREPARES THE DRAFT FORM 990. THE WCRA STAFF, VICE PRESIDENT AND CFO CONDUCT A DETAILED REVIEW OF THE DRAFT FORM 990. PwC US Tax LLP COMPLETES THE FINAL FORM 990. THE WCRA STAFF THEN REVIEWS THE FINAL FORM 990 AND THE CEO SIGNS.”

“Annually, wcra directors and officers are required to review the policy and complete a conflict-of-interest disclosure statement. Answers are reported to the full board to determine if action is needed. In addition, the policy is reviewed with all new board members during their orientation and any disclosures are shared with the board. Board members and the ceo are also required to report any conflict that may arise throughout the year to the board chair or at a board meeting to see if further action is required. Other wcra officers are required to report any conflict of interest that may arise throughout the year to the ceo, another officer, or a board member.”

“The ceo's performance is reviewed and compensation is compared to market via salary surveys, as well as to form 990 compensation information from comparable organizations, and then presented to the wcra personnel committee, made up of independent persons, who review the information and make a recommendation to the full independent board regarding performance evaluation and compensation changes. The board reviews the performance review information and compensation data and approves any change in compensation.”

“The wcra makes its governing documents and financial statements available to the public via its website, www.wcra.biz. The wcra has separate conflict of interest policies for its board of directors, committee members, and wcra staff, and it provides a copy annually to these groups. The conflict of interest policies are available to the members of the wcra upon request.”

“The wcra provides reinsurance protection for serious workers' compensation losses to all primary workers' compensation insurance providers and self-insured employers in the state of minnesota. The association provides full indemnification to its members for workers' compensation losses in excess of a member's retention limit, as provided for under minnesota statutes, chapters 79 and 176. For 2024, reinsurance premiums were billed to its members to cover the estimated present value, using an annual discount rate of 6.5%, of the estimated ultimate liability for members' incurred losses. Premiums also cover the estimated loss expenses, operating, and administrative expenses of the wcra. Premiums are invested in bonds, equities, and other investments with an objective of earning an annual 6.5% return. Securities are stated at fair market value, while certain other assets are stated at net asset value. The wcra anticipates paying future claims of $3.2 billion for losses and loss expenses incurred on or before 12/31/2024. Losses paid from wcra's 1979 inception through 12/31/2024 equal $2.0 billion. The wcra is exempt from federal income tax under irs section 501(c)(27)(a). To qualify for this exemption, any membership organization must meet all the following requirements: 1) it was established by a state before june 1, 1996, exclusively to reimburse members for losses under workers' compensation acts; 2) the state requires that the membership consist of all persons who issue insurance covering workers' compensation losses in the state and all persons and government entities who self-insure against those losses; 3) it operates as a nonprofit organization by returning surplus income to its members or workers' compensation policyholders on a periodic basis and by reducing initial premiums in anticipation of investment income.”

“In 2024, there was a reduction of $150,000,000 in "prior accident year loss reserves from actuarial adjustments" due to favorable development on case-incurred losses and a reduction in projected medical inflation and life expectancy, resulting in lower projected ultimate losses. This resulted in a net negative "benefits paid to members" of $-21,479,802.”

“Recoverable surplus distributions”